Vanguard Natural Resources LLC

Vanguard Natural Resources, LLC (NASDAQ:VNR) Facing Difficulties With Deficiency Payments

Vanguard Natural Resources, LLC (NASDAQ:VNR) has received coverage from Traders News Source, an equity research firm. As per Traders News, the company has made significant progress with its 2016 capital program and is currently achieving a return of over 20%. Moreover, VNR also boasts an inventory of repeatable projects, which would be economical, even in the current environment. Added to this, the commodity prices are expected to get better, during the FY2017, further boosting Vanguard’s prospects.

The company has also been making significant progress with its deficiency payments, under a senior secured reserve-based facility. On January 3, 2017, VNR filed a form 8-K with the SEC, stating that it has made the second deficiency payment, worth $37.5 million. As such, the outstanding amount, borrowed under the credit facility, was reduced to $1.25 billion, with a borrowing base of $1.1 billion. As such, Vanguard still needs to make deficiency payments of up to $150 million, which would be paid in four equal installments, of $37.5 million.

However, Vanguard has expressed significant doubt over its ability to generate sufficient cash flow from operations, sufficient to meet the monthly amount. As such, the company has initiated dialogue with investors and creditors, to reach a more long-term balance sheet solution. According to the latest financial reports, from the company, VNR recorded a net loss of $252.1 million for its 3Q2016, as compared to $469 million, in the previous year. This was mainly due to increased production of natural gas.

The 3Q2016 financial report highlighted that the operating expenses of VNR and the selling and general administrative expenses, surged during the quarter. It is important to note here that the company met its most recent deficiency payment through the sale of its assets, monetization of commodities and utilization of interest rate hedges. Moreover, Vanguard also used $19.8 million, from its cash position, for the same purpose.

Vanguard Natural Resources, LLC (NASDAQ:VNR) closed at a share price of $0.76 per share, at the end of the January 6 trading session, 1.01% higher than the day before.

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